Another old release but the info is quite good.
Wednesday 12 March 1997
AIT targets telesurveillance for comeback
Turnaround: Recovery plan aims at diversifying firm with commercial products related to its border security expertise.
Deborah Dowling
The Ottawa Citizen
For most of 1996, senior executives at Nepean's AIT Corp. were grasping blindly trying to locate the bottom.
Revenues from continuing operations were plunging. Its flagship product line that issued and screened travel documents was stalled. Its new risk management business was barely off the ground.
AIT had been a consistent moneymaker since 1978. Its losses were soaring towards $13.4 million at the end of the fiscal year in September 1996. Another long-standing division was shed along with 50 employees, one-third of the workforce.
Meanwhile, investors in one of the region's original high-technology stars were shell-shocked.
Originally founded as HiTech Canada in 1973, AIT initially offered shares to the public in late 1993 at $12. They traded as high as $17.625 in early 1996 before crashing to the year's low of $3.25. Recently AIT has been trading just under $4.
All this while a new diversification plan called "Innovative Technology for a Safer World" was being unfurled by Peter Bennett, AIT's 1995 corporate catch for chief operating officer.
''We fell on our can,'' says the straight-talking 37-year-old who became president and chief executive officer last August when long-time president Don Smith resigned.
"We clearly had to break out of a constrained marketplace dependent on governments. We've done it in a circuitous way, but we're very much in play."
Indeed, Mr. Bennett's chief priority has been a "recovery plan" that forecasts revenues will jump to as high as $24 million in fiscal 1997. This might put the company back into the 1995 revenue ballpark, although profitability will not make that grade. The company is forecasting either a small profit or small loss.
But far from reneging on the basic outlines of his reconstruction plan for AIT, Mr. Bennett is more confident than ever the former high-tech star is being recast with the proper ingredients.
The January appointment of Bernie Ashe, formerly the Ottawa Senators hockey club's chief operating officer, as vice-president of sales has the company buzzing and his enthusiasm is apparently infectious.
A young high-technology veteran before joining the would-be Senators in 1990, Mr. Ashe says AIT offers the challenge of a start-up enterprise in an established company.
This meshes perfectly with Mr. Bennett's view that the trauma of 1996 only underscored the need to lessen AIT's dependence on one lucrative but unpredictable business -- contracts for government border security controls, especially issuance systems where the status of new software technologies is in flux.
For this reason, Mr. Bennett is determined to push ahead with new and related commercial applications based on the firm's border security expertise. He also aims to give AIT more scope with recent acquisitions for its risk management group.
"The company is in some fairly rich markets that need to be cultivated," he says.
"Part of the problem now is there's all these doors out there to be opened, but we don't know what we'll find. But now behind each door there is an opportunity, not an impediment."
AIT rode to glory by grabbing a 90-per-cent share of the global market in readers for passports, visas and identity documents conforming to international standards.
It has furnished products to 65 per cent of countries issuing machine-readable passports.
Naturally, border control systems remain a key focus and new products will be released this year. Outstanding bids are waiting to be awarded for both reading and issuance technology.
But there's a caveat. The traditional bread-and-butter business has become more treacherous because managing the risks is not as easy as it was in the early days.
Most of last year's woes were the result of a delay in receiving a $2.9-million order from U.S. Customs for inspection readers.
The company said the process was held up because of budgetary wrangling between U.S. President Bill Clinton and Congress. It delayed many major government purchases. There were also bureaucratic problems with U.S. procurement officials.
Then there were difficulties with countries elsewhere in the world. For example, the Malaysian government awarded AIT a $2-million contract, but then retendered it.
Meanwhile, AIT was penalized, some analysts say, for being too inflexible with poorer governments and their agencies that wanted cheaper, less-sophisticated technology for their border security issuance systems.
Mr. Bennett acknowledges, "there's been a great upheaval because of mis-positioning on issuing (software) side."
And as a result AIT is developing new imaging techniques with broader appeal, not just aimed at the very high end of the technology scale. And it's selling its products and others through alliances with other companies rather than as a take-us-or-leave-us proposition.
Because of its dominance, AIT is still invited to bid on just about any tenders going.
"But at the end of the day it's still a government, large-deal dependent marketplace that as chief executive of a publicly-held company, I don't feel comfortable making assurances about."
What makes Mr. Bennett extremely comfortable are the commercial possibilities presented by AIT's experience in border control technologies combining optical character and magnetic strip readers, among others, for different uses.
For example, one customer is IER of Paris, the world's largest supplier of airline check-in equipment. It has purchased AIT equipment to create passenger manifest lists. The lists have been notoriously inaccurate.
Instead of relying on reservations made for a certain flight, scanning equipment could read boarding cards, passports, even luggage check-ins to actually determine who is on a flight in case of an emergency or if illegal immigrants destroy documents in flight.
"For compassionate reasons in the event of a crash and financial penalties for delivering (illegal) aliens with no credentials, airlines have a great incentive to build more reliable passenger information," Mr. Bennett says.
In 1995, AIT made two acquisitions under Mr. Bennett's diversification plan that now form the basis of AIT's risk management group. The value of both purchases was knocked down in 1996 because they weren't generating the profits levels expected. Significant research and development spending was required to revamp and relaunch their products.
But this year Mr. Bennett is buoyed by some promising early results in sales and distribution networks.
One is the Rapid Eye video telesurveillance system that monitors distant locations for management, safety or security purposes. In commercial security situations such as banks, ATMs or convenience stores, Rapid Eye can also identify and verify alarms.
Citibank has already placed a substantial order for its ATMs across the U.S. and Mr. Bennett says security markets such as this could grow to $1 billion in five years.
"This has the potential to make AIT many times bigger than it is today," he says.
"We want to be the number one player, especially in telesurveillance."
Mr. Bennett is also looking for growth, especially in 1998, from its family of Comfile voice, data and imaging recorders. These systems can be used as a digital call logging device for enterprises of all sizes or for professionals such as doctors and lawyers who give advice over the telephone and may need to protect themselves with accurate records.
Another offshoot of the recording business is Witness, a radar recording system with civilian and military applications. For example, AIT has signed a deal with Alenia, an Italian defence contractor, to retrofit customers with AIT's devices.
Because AIT was forced to publicly backtrack on its business projections three times in six months in 1996, Mr. Bennett is aware the company suffered some credibility problems with shareholders.
"It's a tough job to deliver results, especially when you are not in control," he says.
"Now I have confidence the business is more broadly dispersed and I've become a lot more conservative with predictions."
Deborah Dowling is a freelance writer
Class of '93
AIT Corp. |
